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Nokia said Friday that the company will pursue a long-term relationship with Microsoft, and make its Windows Phone 7 operating system the foundation for its mobile phones.

In return, Microsoft will integrate Nokia services into its own, such as Nokia Maps with Bing and AdCenter. Microsoft will provide Nokia with developer tools, and Nokia's application and content store will be integrated into the Microsoft Marketplace, the two companies said.

Symbian and MeeGo, the two other operating systems Nokia supported, will be de-emphasized and eventually phased out.

The sweeping changes were part of Nokia's strategy day in London, where company executives will hold a meeting later on Friday local time to explain the changes in more detail.

In January, Nokia reported operating profits of 884 million euro ($1.21 billion) on net revenue of 12.651 billion euro ($17.38 billion), a 6 percent increase in revenue from a year before. But profits plunged by 23 percent, indicative of the once mighty phone manufacturer's struggles. Nokia then pledged to outline a new strategy on Feb. 11.

Reorganization

"We each bring incredible assets to the table," Stephen Elop, Nokia's chief executive, and Steve Ballmer, Microsoft's chief executive, said in a joint statement. "Nokia's history of innovation in the hardware space, global hardware scale, strong history of intellectual property creation and navigation assets are second to none. Microsoft is a leader in software and services; the company's incredible expertise in platform creation forms the opportunity for its billions of customers and millions of partners to get more out of their devices."

In press materials provided before the call, Nokia did not outline a move to Silicon Valley, as some had expected. It did, however, reorganize itself into two divisions, one oriented around smart devices, and the other around mobile phones. Each unit will own the customer experience and report profits and losses separately, executives said.

Under the smart devices division will be placed the Symbian smartphones and the MeeGo computers, as well as strategic operations. But that unit will also be responsible for creating a "winning Windows Phone portfolio," the company said. It will be led by Jo Harlow.

"Nokia's new Windows Phone 7 focus will undermine its current phone range," said Ian Fogg, a principal analyst for Forrrester, in a tweet. "This is courageous."

Mobile phones will drive Nokia's efforts to "connect the next billion people and bring them affordable access to the Internet and communications," and will be led by Mary McDowell.

"Today, developers, operators and consumers want compelling mobile products, which include not only the device, but the software, services, applications and customer support that make a great experience," Stephen Elop, Nokia president and chief executive, said in a statement. "Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It's now a three-horse race."

As part of that race, Nokia pledged to drive Windows Phone 7 further, through joint marketing initiatives and a shared development roadmap, including hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies, the company said.

"Today, the battle is moving from one of mobile devices to one of mobile ecosystems, and our strengths here are complementary. Ecosystems thrive when they reach scale, when they are fueled by energy and innovation and when they provide benefits and value to each person or company who participates," Elop and Ballmer added. "This is what we are creating; this is our vision; this is the work we are driving from this day forward."

Elop tipped his plans in a strtegic memo that was leaked in advance of the meeting, where he expressed disappointment in MeeGo and called Symbian "non-competitive".

MeeGo, Symbian on the way out

So what does this mean for MeeGo, as well as Symbian? Nokia still plans to brinmg a MeeGo device to market, but it will not a focus for Nokia going forward.

"With Nokia's planned move to Windows Phone as its primary smartphone platform, Symbian becomes a franchise platform, leveraging previous investments to harvest additional value," Nokia said. "This strategy recognizes the opportunity to retain and transition the installed base of 200 million Symbian owners. Nokia expects to sell approximately 150 million more Symbian devices in the years to come.

"Under the new strategy, MeeGo becomes an open-source, mobile operating system project," Nokia added. "MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences. Nokia still plans to ship a MeeGo-related product later this year."

Nokia charactrized Navteq as an "integral part of Nokia's location and advertising business," and will continue to report separately, as will Nokia Siemens Networks.

Mark Hachman Mark joined ExtremeTech in 2001 as the news editor, after rival CMP/United Media decided at the time that online news did not make sense in the new millennium.
Mark stumbled into his career after discovering that writing the great American novel did not pay a monthly salary, and that his other possible career choice, physics, required a degree of mathematical prowess that he sorely lacked.
Mark talked his way into a freelance assignment at CMP’s Electronic Buyers’ News, in 1995, where he wrote the...
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